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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: November 30, 1997 Commission File No. 0-4016
WORTHINGTON INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1189815
- ------------------------ -----------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1205 Dearborn Drive, Columbus, Ohio 43085
- ----------------------------------- --------------
(Address of Principal Executive Offices) (Zip Code)
(614) 438-3210
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name, Former Address and Former Fiscal Year,
If Changed From Last Report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value 96,819,510
- ---------------------------- ------------------------------
Class Outstanding December 31, 1997
Page 1 of 13
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WORTHINGTON INDUSTRIES, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
November 30, 1997 and May 31, 1997...........................3
Consolidated Condensed Statements of Earnings -
Three and Six Months Ended November 30, 1997 and 1996........5
Consolidated Condensed Statements of Cash Flows
Six Months Ended November 30, 1997 and 1996..................6
Notes to Consolidated Condensed Financial Statements.........7
Management's Discussion and Analysis of
Results of Operations and Financial Condition................9
PART II. OTHER INFORMATION................................................13
2
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PART I. FINANCIAL INFORMATION
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Per Share)
<TABLE>
<CAPTION>
November 30 May 31
1997 1997
----------- ---------
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 6,300 $ 7,212
Accounts receivable - net 257,343 266,836
Inventories
Raw materials 172,234 187,572
Work in process and finished products 106,405 109,316
---------- ----------
Total Inventories 278,639 296,888
Prepaid expenses and other current assets 37,865 23,192
---------- ----------
TOTAL CURRENT ASSETS 580,147 594,128
Investment in Unconsolidated Affiliates 60,956 57,040
Intangible Assets 96,690 98,132
Other Assets 30,106 32,365
Investment in Rouge 91,494 88,494
Property, plant and equipment 1,189,108 1,036,621
Less accumulated depreciation 373,554 345,594
---------- ----------
Property, Plant and Equipment - net 815,554 691,027
---------- ----------
TOTAL ASSETS $1,674,947 $1,561,186
========== ==========
</TABLE>
3
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WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands, Except Per Share)
<TABLE>
<CAPTION>
November 30 May 31
1997 1997
----------- -----------
(Unaudited) (Audited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 121,370 $ 117,910
Notes payable 107,661 50,000
Accrued compensation, contributions to
employee benefit plans and related taxes 37,785 38,058
Dividends payable 12,587 12,572
Other accrued items 36,047 20,244
Income taxes 3,475 2,026
Current maturities of long-term debt 2,463 5,984
----------- -----------
TOTAL CURRENT LIABILITIES 321,388 246,794
Other Liabilities 16,657 18,839
Long-Term Debt:
Conventional long-term debt 362,595 361,899
Debt exchangeable for common stock 91,494 88,494
----------- -----------
Total Long-Term Debt 454,089 450,393
Deferred Income Taxes 120,657 120,765
Minority Interest 26,142 8,877
Shareholders' Equity
Common shares, $.01 par value 969 968
Additional paid-in capital 115,557 114,052
Unrealized loss on investment (5,556) (5,563)
Foreign currency translation (2,417) (1,861)
Retained earnings 627,461 607,922
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 736,014 715,518
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,674,947 $ 1,561,186
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
4
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WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In Thousands Except Per Share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30 November 30
----------- -----------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 520,320 $ 458,349 $ 1,020,747 $ 888,641
Cost of goods sold 447,529 392,661 876,625 759,598
----------- ----------- ----------- -----------
GROSS MARGIN 72,791 65,688 144,122 129,043
Selling, general & administrative expense 37,008 29,689 69,440 56,557
----------- ----------- ----------- -----------
OPERATING INCOME 35,783 35,999 74,682 72,486
Other income (expense):
Miscellaneous income (expense) 685 302 477 729
Interest expense (6,876) (3,290) (13,654) (7,237)
Equity in net income of unconsolidated
affiliates 5,170 3,153 9,375 5,768
----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES 34,762 36,164 70,880 71,746
Income taxes 12,862 13,497 26,226 27,118
----------- ----------- ----------- -----------
NET EARNINGS $ 21,900 $ 22,667 $ 44,654 $ 44,628
=========== =========== =========== ===========
AVERAGE COMMON SHARES OUTSTANDING 96,784 96,510 96,761 96,511
EARNINGS PER COMMON SHARE $.23 $.23 $.46 $.46
---- ---- ---- ----
CASH DIVIDENDS DECLARED
PER COMMON SHARE $.13 $.12 $.26 $.24
---- ---- ---- ----
</TABLE>
See notes to consolidated condensed financial statements.
5
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WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
November 30
-----------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 44,654 $ 44,628
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 30,264 24,126
Deferred income taxes (108) (108)
Equity in undistributed net income of unconsolidated affiliates (4,289) (1,616)
Minority interest in net loss of consolidated subsidiary (16)
Changes in assets and liabilities:
Current assets 12,835 (11,460)
Other assets 2,212 (843)
Current liabilities 20,439 (17,448)
Other liabilities (2,182) (671)
--------- ---------
Net Cash Provided By Operating Activities 103,809 36,608
INVESTING ACTIVITIES
Investment in property, plant and equipment, net (153,295) (78,582)
Acquisitions, net of cash acquired (8,380)
--------- ---------
Net Cash Used By Investing Activities (153,295) (86,962)
FINANCING ACTIVITIES
Proceeds from (payments on) short-term borrowings 57,661 33,500
Proceeds from long-term debt 2,267 28,459
Principal payments on long-term debt (5,092) (8,689)
Proceeds from issuance of common shares 1,607 1,268
Proceeds from minority interest 17,281
Repurchase of common shares (1,211)
Dividends paid (25,150) (21,800)
--------- ---------
Net Cash Provided By Financing Activities 48,574 31,527
--------- ---------
Decrease in cash and cash equivalents (912) (18,827)
Cash and cash equivalents at beginning of period 7,212 17,580
--------- ---------
Cash and cash equivalents at end of period $ 6,300 $ 1,247
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
6
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WORTHINGTON INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - MANAGEMENT'S OPINION
--------------------
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
(consisting of a normal recurring nature) necessary to present fairly
the financial position of Worthington Industries, Inc. and Subsidiaries
(the Company) as of November 30, 1997 and May 31, 1997; the results of
operations for the three and six months ended November 30, 1997 and
1996, and cash flows for the six months ended November 30, 1997 and
1996.
The accounting policies followed by the Company are set forth
in Note A to the consolidated financial statements in the 1997
Worthington Industries, Inc. Annual Report to Shareholders which is
included in the Company's 1997 Form 10-K.
NOTE B - INCOME TAXES
------------
The income tax rate is based on statutory federal and state
rates, and an estimate of annual earnings adjusted for the permanent
differences between reported earnings and taxable income.
NOTE C - EARNINGS PER SHARE
------------------
Earnings per common share for the three and six months ended
November 30, 1997 and 1996 are based on the weighted average common
shares outstanding during each of the respective periods.
NOTE D - RESULTS OF OPERATIONS
---------------------
The results of operations for the three and six months ended
November 30, 1997 are not necessarily indicative of the results to be
expected for the full year.
NOTE E - INVOLUNTARY CONVERSION OF ASSETS
--------------------------------
On August 14, 1997, the Company experienced a fire at its steel
processing facility in Monroe, Ohio. The fire significantly damaged the
pickling area of the facility and caused less extensive damage to the
remainder of the plant. The Company has shifted as much business as
possible to its other locations, with the remainder being sent to third
party processors. Blanking operations have resumed with slitting
expected to return within a few months, and pickling in less than one
year.
7
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WORTHINGTON INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Company carries both property damage and business
interruption insurance and as a result, management does not expect the
fire to have a material adverse impact on the Company's financial
results. The total loss from business interruption, extra expenses and
property damage is expected to be around $75 million. The Company will
record the expected insurance recovery for business interruption and
extra expenses as a receivable, netted with amounts advanced by the
insurance company. The estimated lost net benefit from the business
interruption insurance for the reporting period, which approximates the
operating income which would have resulted had the fire not occurred
thru November 30, 1997 was approximately $4,000,000 and was included
in net sales and other revenues.
NOTE F - DEBT
----
On December 9, 1997, the Company issued $150 million of 6.7%
Notes due 2009. The proceeds were used to pay down $90 million of the
revolving credit facility (leaving $140 million available) and to pay
$60 million of other debt. The Notes were issued against the $450
million shelf registration.
8
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WORTHINGTON INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The second quarter sales were a record for the Company. For the three
months ended November 30, 1997, net sales of $520.3 million were 14% higher than
in last year's second quarter. Net earnings were $21.9 million, down 3% from
last year. Earnings per share were $.23, even with the previous year.
Sales for the first six months results were a record. For the six
months ended November 30, 1997, net sales of $1.02 billion were 15% higher than
in last year's first six months. Net earnings were $44.7 million and earnings
per share were $.46, both even with the previous year.
Sales increases for the quarter and six months were achieved for all
segments. Increased earnings for the quarter and six months for processed steel
products were offset by lower results for custom products and cast products.
Gross margin was up 11% for the quarter and 12% for the six months, and
as a percentage of sales was 14.0% for the quarter(14.3% last year) and 14.1%
for the six months (14.5% last year). Material, labor and overhead costs were
higher for the quarter and six months due to the inclusion of acquired
operations in the current year amounts and the startup of the Delta steel
processing plant. The material cost component of cost of goods sold, primarily
in steel processing, contributed to most of the increase in costs.
Selling, general and administrative expense increased 25% for the
quarter and 23% for the six months due mostly to the startup of the Delta and
Decatur steel processing plants and the inclusion of expenses for acquired
operations in the current year. As a percent of sales, this expense was 7.1% for
the quarter (6.5% last year) and 6.8% for the six months (6.4% last year).
Operating income was 1% lower for the quarter and 3% higher for the six months.
As a percentage of sales, operating income was 6.9% for the quarter (7.9% last
year) and 7.3% for the six months (8.2% last year).
Interest expense increased 109% for the three months and 89% year to
date. Average debt outstanding increased due to the high level of capital
expenditures and the average interest rate increased over last year. The Company
capitalized interest of $1,786,000 ($1,968,000 last year) during the quarter and
$3,255,000 ($2,897,000 last year) for the six months.
9
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Equity in net income of unconsolidated affiliates was up 64% for the
quarter and 63% for the six months. Equity from Worthington Armstrong Venture,
TWB and Acerex were up significantly for each period.
Income taxes decreased 5% for the three month period and 3% for the six
months as the effective tax rate was lower (37.0% for the quarter and
year-to-date compared to last year's 37.3% for the quarter and 37.8%
year-to-date) due to lower state taxes.
The processed steel products segment posted record sales for both
periods as all lines of business increased sales. Operating income was up
significantly for both periods and margin percentages equal to last year. Last
year's results were up for both periods from fiscal 1996 as the effect of
automotive strikes were more than offset by increased profitability at pressure
cylinders and metal framing. Steel processing sales improved from last year at
the majority of the plants despite summer strikes, shutdowns in the automotive
and appliance markets and a fire at the Monroe, Ohio plant. New sales from the
start-up of the Delta, Ohio plant contributed the largest increase. Steel
processing operating income was up for the quarter and down for the six month
period. Second quarter's profitability was supported by the Delta's startup and
some margin improvements. Steel processing had lower margins in the first six
months and poor volume at the Malvern, PA plant.
On August 14, 1997, the Company experienced a fire at its steel
processing facility in Monroe. The fire significantly damaged the pickling area
of the facility and caused less extensive damage to the remainder of the plant.
The Company has shifted as much business as possible to its other locations,
with the remainder being sent to third party processors. Blanking is now back in
operation, while slitting is expected to return within a few months and pickling
in around one year. The estimated net benefit from the business interruption
insurance, which approximates the lost operating income which would have
resulted had the fire not occurred thru November 30, 1997 was approximately
$4,000,000 and was included in net sales and other revenues.
Pressure cylinders' sales were up for the quarter due to product mix;
however, the change in mix resulted in lower operating income. For the six
months sales and operating income were up due to increased volume from market
share gains. The metal framing business increased sales and operating income due
with higher volume and selling prices due to improved market conditions and
operating efficiency gains. The auto body panel business continued to contribute
significantly to the segment's increased operating income for the quarter and
six month periods. Increased volume continued due to strong demand for its
automotive replacement parts.
Sales for the custom products segment were up for the first quarter and
six months; however, operating income was lower for both periods. Last year's
10
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results for each period improved over fiscal 1996 due to higher volume for
automotive contracts and improvement at newer, non-automotive plants. The
Plastics operations increased sales for both periods due to the acquisition of
PMI in December 1996. Operating income was lower for both periods because of the
summer strikes and shutdowns in the automotive and appliance sectors and the end
of a major automotive contract. During August, the plastics operation formed a
strategic alliance with a German plastics company, Troester Systeme und
Komponenten, opening up opportunities for global growth without additional
capital investment. Precision Metals profits increased above last year's second
quarter and six months on sales that were flat for the quarter and slightly
lower for the six month period.
Sales for the cast products segment sales were higher than in last
year's second quarter and first six months; however, operating income was lower
due to lower selling prices, higher material costs and production
inefficiencies. Last year's results were lower than in fiscal 1996 because of
lower volume and the resulting decreases in production efficiencies and coverage
of fixed costs.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1997, the Company's current ratio was 1.8:1, down from
2.4:1 at May 31, 1997, mostly due to an increase in notes and accounts payable.
Total debt as a percentage of total committed capital (total debt and
shareholder's equity), both excluding DECS, increased to 39% from 37% at May 31,
1997. Working capital was $258.8 million, 35% of the Company's total net worth,
down from 49% at May 31, 1997. As a percentage of annualized sales, average
working capital was 14.8%, down from 18.4% for last year's first six months.
During the six months, the Company's cash position decreased by $.9
million. Cash provided by operating activities was $103.8 million, up from $36.6
million last year. Capital expenditures of $153.3 million and dividends paid of
$25.2 million were funded mostly from cash provided from operations, short-term
borrowings and proceeds from minority interest investment. Capital expenditures
were up 95% over last year and will continue at high levels throughout the
fiscal year with the construction of the Decatur, Alabama steel processing plant
and funding of the Spartan Steel joint venture.
At November 30, 1997, $140 million of the $190 million revolving credit
facility was unused. On December 9, 1997, the Company issued $150 million of
6.7% notes due 2009 against the $450 million "shelf" registration established in
May 1996. The Company expects its operating results and cash from normal
operating activities to improve during the remainder of the fiscal year.
Additional borrowings may be needed to support anticipated capital expenditures.
11
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Immediate borrowing capacity plus cash generated from operations should be more
than sufficient to fund expected normal operating cash needs, dividends, debt
payments and capital expenditures for existing businesses. The Company will
continue to consider long-term debt issuance as an alternative depending on
financial market conditions.
IMPACT OF YEAR 2000
The Company has completed an assessment regarding modifications of its software
so that its computer systems will function properly with respect to dates in the
year 2000 and thereafter. The total Year 2000 project cost is estimated at
approximately $1.8 million ($.6 million incurred to date), the remaining amount
will be evenly expensed between now and the estimated completion date in the
fourth calendar quarter of 1998. The Company believes, that with the
modifications to existing software, the Year 2000 Issue will not pose
significant operational problems. The Company has initiated communications with
significant vendors and customers to confirm their plans to become Year 2000
compliant and assess any possible risk or effects to the Company's operations.
The Company believes their systems will be properly converted and sufficiently
compliant as to not materially affect operations.
FORWARD-LOOKING INFORMATION
The Company wishes to take advantage of the Safe Harbor provisions
included in the Private Securities Litigation Reform Act of 1995 (the "Act").
Statements by the Company relating to future revenues and cash, growth, or plant
start-ups or capabilities and other statements which are not historical
information constitute "forward looking statements" within the meaning of the
Act. All forward looking statements are subject to risks and uncertainties which
could cause actual results to differ from those projected. Factors that could
cause actual results to differ materially include, but are not limited to, the
following: general economic conditions; conditions in the Company's major
markets; competitive factors and pricing pressures; product demand and changes
in product mix; changes in pricing or availability of raw material, particularly
steel; delays in construction or equipment supply; and other risks described
from time to time in the Company's filings with the Securities and Exchange
Commission.
12
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits - Exhibit 4 Second Supplemental Indenture dated as of December
12, 1997 between the Company and PNC Bank, National Association, as
Trustee Exhibit 27 Financial Data Schedule
B. Reports on Form 8-K. There were no reports on Form 8-K during the three
months ended November 30, 1997.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORTHINGTON INDUSTRIES, INC.
Date: January 13, 1998 By: /s/ Donald G. Barger, Jr.
---------------- -----------------------------------------
Donald G. Barger, Jr.
Vice President-Chief Financial Officer
By: /s/ Michael R. Sayre
----------------------------------------
Michael R. Sayre
Controller
13
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Exhibit 4
- -------------------------------------------------------------------------------
WORTHINGTON INDUSTRIES, INC.,
Issuer
and
PNC BANK, OHIO, NATIONAL ASSOCIATION,
Trustee
---------------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of December 12, 1997
Supplemental to Indenture dated as of May 15, 1996
- -------------------------------------------------------------------------------
<PAGE> 2
SECOND SUPPLEMENTAL INDENTURE dated as of December 12,1997
(this "Supplemental Indenture"), made and entered into by and between
Worthington Industries, Inc., a corporation organized and existing under the
laws of the State of Delaware having its principal office at 1205 Dearborn
Drive, Columbus, Ohio 43085 (the "Company"), and PNC Bank, Ohio, National
Association, a national banking association duly organized and existing under
the laws of the United States, as Trustee (the "Trustee") under the indenture of
the Company (the "Indenture") dated as of May 15, 1996.
WHEREAS, the Company and the Trustee have heretofore executed
and delivered a First Supplemental Indenture dated as of February 27, 1997; the
Indenture and the First Supplemental Indenture being hereinafter collectively
referred to as the "Indenture"); and
WHEREAS, the Indenture provides for the issuance from time to
time of Debt Securities, issuable for the purposes and subject to the
limitations contained in the Indenture; and
WHEREAS, Section 9.01(j) of the Indenture also provides that
the Company and Trustee may enter into one or more indentures supplemental to
the Indenture without the consent of any Holder (a) to add to, change or
eliminate any of the provisions of the Indenture with respect to any series of
Debt Securities if such action becomes effective when no such Debt Security is
outstanding and (b) to provide for the form or terms of Debt Securities of any
series as permitted by Sections 2.01 and 2.03 thereof; and
WHEREAS, the Company has duly authorized the creation of a
series of its Debt Securities denominated its "6.70% Notes Due 2009" in the
principal amount of $150,000,000 (such Debt Securities being referred to herein
as the "Notes"); and
WHEREAS, the entry into this Supplemental Indenture by the
parties hereto is in all respects authorized by the provisions of the Indenture;
and
WHEREAS, the Company has duly authorized the execution and
delivery of this Supplemental Indenture, and all things necessary have been done
to make the Notes, when executed by the Company and authenticated and delivered
hereunder and duly issued by the Company, the valid obligations of the Company,
and to make this Supplemental Indenture a valid agreement of the Company, in
accordance with their and its terms:
NOW, THEREFORE:
For and in consideration of the premises and purchase of the
Debt Securities of any series issued on or after the date hereof by the Holders
thereof, it is
<PAGE> 3
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the securities of any such series, as follows:
ARTICLE I
Certain Provisions of General Application
SECTION 101. Definitions.
For all purposes of the Indenture and this Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article;
(2) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to the Indenture and this Supplemental Indenture
as a whole and not to any particular Article, Section or other subdivision; and
(3) capitalized terms used but not defined herein are used as
they are defined in the Indenture.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Notes.
"Comparable Treasury Price" means, with respect to any
redemption date, (a) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (b) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (i) the average
of the Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains
fewer than four such Reference Treasury Dealer Quotations, the average of all
such Quotations.
"Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Salomon Brothers
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc Montgomery
Securities, Inc. and their respective successors; provided, however, that if any
of the foregoing shall cease to be a primary U.S. Government securities dealer
in New York
2
<PAGE> 4
City (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.
on the third Business Day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any
Note, the remaining scheduled payments of the principal thereof to be redeemed
and interest thereon that would be due after the related redemption date but for
such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such Notes, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to such redemption date.
"Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
SECTION 102. Effect of Headings.
The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.
SECTION 103. Successors and Assigns.
All covenants and agreements in this Supplemental Indenture by
the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 104. Separability.
In case any provision in this Supplemental Indenture or the
Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
3
<PAGE> 5
SECTION 105. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this Supplemental
Indenture by any of the provisions of the Trust Indenture Act, such required
provision shall control.
SECTION 106. Benefits of Supplemental Indenture.
Nothing in this Supplemental Indenture, expressed or implied,
shall give to any person, other than the parties hereto and their successors
hereunder, and the Holders of the Notes any benefit or any legal or equitable
right, remedy or claim under this Supplemental Indenture.
SECTION 107. Governing Law.
THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND THIS SUPPLEMENTAL
INDENTURE AND EACH SUCH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ARTICLE II
The Notes
SECTION 201. Title and Terms.
There is hereby created under the Indenture a series of Debt
Securities known and designated as the "6.70% Notes Due 2009" of the Company.
The aggregate principal amount of Notes that may be authenticated and delivered
under this Indenture is limited to $150,000,000, except for Notes authenticated
and delivered upon reregistration of, transfer, of, or in exchange for, or in
lieu of, other Notes pursuant to Section 2.07, 2.08, 2.09 or 9.04 of the
Indenture.
The Stated Maturity for payment of principal of the Notes
shall be December 1, 2009, and the Notes shall bear interest at the rate of
6.70% per annum, from December 12, 1997, or the most recent interest payment
date to which interest has been paid or duly provided for, payable semi-annually
in arrears on June 1 and December 1 of each year (commencing June 1, 1998, to
the persons in whose names the Notes (or any predecessor securities) are
registered at the close of business on May 15 or November 15, as the case may
be, next preceding such interest payment date, until principal thereof is paid
or made available for payment.
4
<PAGE> 6
The Notes shall be initially issued in the form of a Global
Security and the depositary for the Notes shall be the Depository Trust Company,
New York, New York (the "Depositary").
The Notes shall not be subject to any sinking fund.
The Notes shall be in registered form without coupons and
shall be issuable in denominations of $1,000 and any integral multiple thereof.
The Notes are subject to redemption upon notice mailed at
least 30 days but not more than 60 days prior to the redemption date to each
Registered Holder. The Notes may be redeemed, as a whole or in part, at the
option of the Company at a redemption price equal to the greater of (a) 100% of
the principal amount to be redeemed and (b) the sum of the present values of the
Remaining Scheduled Payments thereon discounted to the redemption date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 15 basis points, plus, in either case, accrued
interest on the principal amount being redeemed to the date of redemption.
Unless the Company defaults in payment of the redemption price, on and after the
applicable redemption date, interest will cease to accrue on the Notes or
portions thereof called for redemption.
The form of Note attached hereto as Exhibit A is hereby
adopted, pursuant to section 9.01(j) of the Indenture, as a form of Debt
Securities of a series that consists of the Notes.
ARTICLE III
Miscellaneous
SECTION 301. Discharge
The Notes and the security provided by this Supplemental
Indenture shall be subject to defeasance in accordance with Article XI of the
Indenture .
SECTION 302. Confirmation of Indenture.
The Indenture, as supplemented and amended by this
Supplemental Indenture and all other indentures supplemental thereto, is in all
respects ratified and confirmed, and the Indenture, this Supplemental Indenture
and all indentures supplemental thereto shall be read, taken and construed as
one and the same instrument.
5
<PAGE> 7
SECTION 303. Concerning the Trustee.
The Trustee assumes no duties, responsibilities or liabilities
by reason of this Supplemental Indenture other than as set forth in the
Indenture.
----------------
This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
WORTHINGTON INDUSTRIES, INC.
By:
--------------------------
Name:
Title:
Attest:
-----------------------
Name:
Title:
PNC BANK, OHIO, NATIONAL
ASSOCIATION, as Trustee
By:
--------------------------
Name:
Title:
Attest:
-----------------------
Name:
Title:
STATE OF )
) SS:
COUNTY OF )
On the day of December, 1997, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that she/he is the ______________ of WORTHINGTON INDUSTRIES, INC., one
of the corporations described in and which executed the foregoing instrument;
that
6
<PAGE> 8
she/he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that she/he signed her/his name
thereto by like authority.
----------------------------------
Notary Public
SEAL
STATE OF )
) SS:
COUNTY OF )
On the day of December, 1997, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say that she/he is the ______________ of PNC BANK, OHIO, NATIONAL ASSOCIATION,
one of the corporations described in and which executed the foregoing
instrument; that she/he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that she/he signed
her/his name thereto by like authority.
----------------------------------
Notary Public
SEAL
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ON FORM 10Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 6,300
<SECURITIES> 0
<RECEIVABLES> 260,751
<ALLOWANCES> 3,408
<INVENTORY> 278,639
<CURRENT-ASSETS> 580,147
<PP&E> 1,189,108
<DEPRECIATION> 373,554
<TOTAL-ASSETS> 1,674,947
<CURRENT-LIABILITIES> 321,388
<BONDS> 454,089
0
0
<COMMON> 969
<OTHER-SE> 735,045
<TOTAL-LIABILITY-AND-EQUITY> 1,674,947
<SALES> 1,020,747
<TOTAL-REVENUES> 1,020,747
<CGS> 876,625
<TOTAL-COSTS> 876,625
<OTHER-EXPENSES> 69,440
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,654
<INCOME-PRETAX> 70,880
<INCOME-TAX> 26,226
<INCOME-CONTINUING> 44,654
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,654
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
